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TMI Blog2017 (12) TMI 1882X X X X Extracts X X X X X X X X Extracts X X X X ..... ise as the Court, which made the decree, directs. A deposit of any amount by a judgment debtor in the Court to purchase peace by way of stay of execution or to show bonafides for preventing an order of winding up is not a payment of decretal amount in terms of Order 21 Rule 1 of CPC which prescribes specific modes for the satisfaction of a money decree. The payment made by the decree holder under Rule 1 of Order 21 of CPC and a deposit made by the judgment debtor in Court for obtaining stay of execution of decree are altogether different courses adopted by the judgment debtor. Payment under Order 21 Rule 1 of CPC satisfies a decree holder whereas, a deposit in the Court to avoid execution keeps the amount beyond the reach of the decree holder and leaves him waiting for its release - claimant is well within its right to claim the difference in the amounts payable as on date of payment/realization and the amounts received, which works out to US $ 319,816/- as on 23rd November 2017 increasing at US $ 144 per day. The question of deduction of any income tax at source by respondent also does not arise. This amount of Rs. 10,00,000/- plus accumulated interest also should be remitted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayer is for payment of US $ 657,850/- together with interest at 8% from 13th April 2009 to 5th July 2010 and further interest on the total amount at 8% per annum till payment and/or realization by making payment into the claimant s bank account, on or around 31st July 2013, a sum of US $ 662,362/- has been paid over by Prothonotary and Senior Master, High Court, Bombay to claimant. According to claimant, this amount as on 31st July 2013 had increased to US $ 900,107/- and that left a short fall of US $ 237,475/- which, as on 23rd November 2017, has increased to US $ 319,816/- and it keeps increasing at the rate of US $ 144 per day until payment/realization. Prayer clause (f) reads as under :- (f) that in the event of the Respondent failing to comply with prayer clause (c)(ii) above, (i) this Hon'ble Court be pleased to order and direct the attachment of the movable and immovable assets of the Respondent.; (ii) that this Hon'ble Court be pleased to order and direct the arrest and detention the Directors of the Respondent in civil prison for failure of the Respondent in depositing the balance decretal amount to the Claimant.; (iii) that this Hon'ble Court be pleased to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act, 1956. The said petition was disposed by an order dated 7th April 2010 whereby respondent was directed to deposit a sum of Rs. 1,50,00,000/- with the Prothonotary and Senior Master, High Court, Bombay within a period of four weeks and dispute between the parties was referred to arbitration. The order of course also provided for consequences of default which is not relevant because the amount of Rs. 1,50,00,000/- was deposited by respondent. The Arbitrator published an Award dated 21st February 2011 in favour of claimant. Operative part of the Award reads as under :- AWARD (1) The Respondents are directed to pay to the Claimants, the sum of US $ 658,150 with interest thereon @ 8% from 13th April 2009 to 5th July 2010 and at the same rate on the total amount from 6th July 2010 till payment and/or realisation. The Respondents are also directed to pay to the Claimants, the sum of Rs. 8,00,000/- as costs of the Arbitration. The said amount of Rs. 8,00,000/- to be paid within a period of 6 weeks from the date of the award. (2) The Claimants are directed to pay to the Arbitral Tribunal, the sum of Rs. 5,000/- towards stamp paper, stenographer charges, printing and miscellaneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to retain/withhold a sum of Rs. 10,00,000/- from the amounts deposited in Court by the Respondent and remit forthwith the balance amount together with all accrued interest that is admittedly due to the Applicant in US $ currency into the Applicant's bank account viz. Sino Ocean Limited, Bank of India, Hongkong Branch, Ruttonjee Centre, 2nd floor, 11 Duddell Street, Hong Kong A/c No. 0233037230, Swift Code: BKIDHKHHXXX in accordance with law. ii) All issues between the parties in the Chamber Summons are expressly kept open and will be decided at the final hearing of the Chamber Summons. iii) Chamber summons to come up for hearing on 17th June 2013. iv) Liberty to apply. (emphasis supplied) Subsequently, Prothonotary and Senior Master remitted, on 31st July 2013, a sum of US $ 662,362/-. 8 According to Shri Narichania, payments made by respondent with the Prothonotary and Senior Master are not payments in terms of Order 21 Rule 1 of the Code of Civil Procedure, 1908 (CPC) which prescribes specific modes for satisfaction of a money decree but it is only a deposit made for stay of execution pending dismissal of the challenge to the Award to avoid payment of decretal amount. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... useful to reproduce the statements given by Shri Narichania for claimant and Shri Mishra for respondent. (I) The statement given by Shri Narichania reads as under :- M/s Sino Ocean Ltd., Amount to be received from M/s Salvi Chemicals Amount (in US $) Particulars Opening Balance Interest Balance Opening Balance as on 13.04.2009 657,850.00 -- 657,850.00 Add: - Simple Interest @ 8% p.a. for 448 days i.e., from 13.04.2009 to 05.07.2010 657,850.00 64,595.00 722,445.00 Add: - Simple Interest @ 8% p.a. for 1122 days i.e., from 06.07.2010 to 31.07.2013 722,445.00 177,662.00 900,107.00 Balance payable as on 31.07.2013 900,107.00 Less : - Amount paid by M/s Salvi Chemicals on 31/7/2013 662,362.00 Amount due as on 31.07.2013 237,475.00 Add: - Simple Interest @ 8% p.a. for 1575 days i.e., from 31.07.2013 to 23.11.2017 237,475.00 82,071.00 319,816.00 Balance due as on 23.11.2017 319,816.00 Note: Actual amount remitted to Sino Ocean Ltd., account with Bank of India, Hong Kong Branch : 1037230 USD 2007002270-01 on 31/7/2013 : USD 6,62,362:00 - 23.04 = 6,62,338:96 II) The statement given by Shri Mishra for respondent (corrected by Court) reads as under :- STATEMENT OF CALCULATION AMOUNT DUE UNDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 241 to submit that in an action to recover an amount payable in a foreign currency, one of the dates for selection by the Court as the proper date for fixing the rate of exchange at which the foreign currency amount has to be converted is the date when the decretal amount is paid or realized. Shri Mishra submitted that since respondent has deposited from time to time the decretal amount with the Prothonotary and Senior Master, the date on which those amounts were deposited will be the proper date for fixing the rate of exchange and it is immaterial when claimant got the money in their bank accounts. In effect, what counsel for respondent Shri Mishra submitted was it is too bad that the dollar rate fluctuated to such an extent that claimant got almost 40% less than what they were entitled to. Shri Mishra also relied upon a judgment in Bharat Heavy Electricals Ltd. Vs. R.S. Avtar Singh Co. 2013 AIR (SC) 252 to submit that as per the provisions of Order 21 Rule 1 of the CPC, the moment respondent deposited the decretal amount with the Prothonotary and Senior Master, their responsibility is over and any risk on currency fluctuation would be to the account of claimant. Shri Mishra also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited later on 23rd August 2011 and on 17th September 2012. 13 Therefore, the amounts deposited by respondent under the orders of this Court cannot, by any stretch of imagination, be termed as payments as envisaged in Order 21 Rule 1 of CPC and as such the judgment debt. As per Order 21 Rule 1 of CPC, the modes of payment of a money decree are : (a) by depositing into the Court whose duty it is to execute the decree, or send to that Court by postal money order or through a bank; or (b) out of Court, to the decree-holder by postal money order or through a bank or by any other mode wherein payment is evidenced in writing; and (c) otherwise as the Court, which made the decree, directs. A deposit of any amount by a judgment debtor in the Court to purchase peace by way of stay of execution or to show bonafides for preventing an order of winding up is not a payment of decretal amount in terms of Order 21 Rule 1 of CPC which prescribes specific modes for the satisfaction of a money decree. 14 The payment made by the decree holder under Rule 1 of Order 21 of CPC and a deposit made by the judgment debtor in Court for obtaining stay of execution of decree are altogether different course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt. Once such an amount assumes the character of a judgment debt, the decree passed by the Civil Court must be executed subject only to the deductions and adjustments permissible under the Code of Civil Procedure and therefore the question of deducting any tax at source does not and cannot arise. Paragraphs 8 and 9 of Islamic Investment Company (supra) read as under :- 8 Before the Supreme Court, the issue was that if the amount payable to Datar was treated as salary, it would have attracted deduction of tax at source under Section 18 of the Income-tax Act. While considering this issue the Supreme Court observed that a substantial part of the claim decreed, represented compensation for wrongful termination of employment and it would be difficult to predicate of the claim sought to be enforced what part thereof if any represented salary due. However, the Supreme Court observed as follows :- Granting that compensation payable to an employee by an employer for wrongful termination of employment be regarded as in the nature of salary, when the claim is merged in the decree of the Court, the claim assumes the character of a Judgment debt, and to judgment debts Section 18 has not been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Code of Civil Procedure. The learned Counsel for the Food Corporation of India has not been in a position to point out any provision under the Income Tax Act or under Section 195 in particular or under the Code of Civil Procedure where the amount of the interest payable under a decree is deductible from the decretal amount on the ground that it is an interest component on which tax is liable to be deducted at source. 18 Therefore, the question of deduction of any income tax at source by respondent also does not arise. This amount of Rs. 10,00,000/- plus accumulated interest also should be remitted by the Prothonotary and Senior Master into the same account of claimant as was done earlier. Of course, credit will be given to respondent for this amount remitted based on the exchange rate prevailing on the date of remittance. It is open to respondent also to write to the Prothonotary and Senior Master to immediately remit to claimant amount in US dollars equivalent to Rs. 10,00,000/- plus accumulated interest. It is also stated by Shri Narichania that the cost of Rs. 8 lakhs awarded in the arbitration is yet to be paid by respondent. 19 Therefore, respondent is directed to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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